Nursing home operator Mariner Health Care Inc. sued its former law firm Troutman Sanders for allegedly allowing $40 million from an asset sale to go to another client and trying to paper over the payment after the fact.
Money from the $50 million sale of a medical supply unit to Omnicare Inc. went to Rubin Schron, an investor who bought some of Mariner’s real estate through a company he controlled, according to a complaint filed Nov. 9 against the law firm in Fulton County State Court.
Mariner and Schron’s company were both represented by lawyers who eventually joined Troutman Sanders, according to the complaint.
Mariner received $10 million directly for the sale, while the rest was to be paid through an intermediary. The lawyers didn’t complete documents recording payment for the Omnicare deal until after they got a subpoena from the U.S. Justice Department, which was investigating the transaction for possible violation of kickback laws, Mariner alleged.
“If Troutman could account for the missing $40 million payment on ‘paper,’ then Schron could avoid the risk of being found guilty of violating the Anti-Kickback Statute,” according to the complaint. Atlanta-based Mariner is seeking $40 million and punitive damages.
In a pending case, Schron sued in New York state court, accusing the law firm of breaching fiduciary duties. He isn’t a defendant in the Mariner suit.
Troutman Sanders Monday issued a statement calling Mariner’s claims “without merit” and saying the firm will fight the Georgia lawsuit. Steve A. Engel, an attorney for Schron, called the Georgia lawsuit “baseless.” L. Lin Wood, an attorney for Mariner, said Monday that the sale of Mariner Medical Supply to Omnicare wasn’t a disguised kickback but a “fair price.”